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BOSTON—When Democratic voters head to the polls next week they'll have two political veterans to choose from in the race for Massachusetts treasurer -- Steve Grossman and Steve Murphy.

Grossman, a past chairman of the Democratic National Committee, has spent much of his life helping others get elected to office, from former Gov. Michael Dukakis to former President Bill Clinton.

Murphy, who ran a losing campaign for treasurer eight years ago, is a longtime Boston city councilor who has portrayed himself as the candidate who best understands the needs of middle and working class voters.

The contest is gaining extra attention this year with the decision of incumbent Treasurer Timothy Cahill to jump into the race for governor, leaving one of Massachusetts' six statewide seats on Beacon Hill without an incumbent challenger.

Grossman and Murphy will square off in the Democratic primary Sept. 14. The winner goes on to face Republican state Rep. Karyn Polito in the Nov. 2 general election.

In Massachusetts, the treasurer oversees several functions, including the state pension fund, the Massachusetts Lottery and the school building assistance fund.

Both Grossman and Murphy say they'd use a small portion of the pension fund to aid the state's small businesses.

Murphy says he'd set aside $500 million from the fund to help spur bank lending to struggling sectors of the economy. He says he'd invest the money at local banks at reduced rates and then tell the banks to loan the money to qualified businesses.

"You can't create a state bank. What you can do is deposit funds into banks and offer a linked deposit program," he said.

Grossman also said he wants to use the pension fund to help set aside half a billion dollars to give a lift to the state's businesses.

"I am going to move money into small community banks that have a track record who are willing to lend to small businesses," Grossman said. He said he'd require the banks give the state competitive rates and publicly disclose how they are using the money.

As head of the state lottery, the new treasurer will face the challenge of trying to wring more profit out of a state gambling program that is routinely described as having matured with little room left for growth.

Grossman said he doesn't accept that the lottery can't continue to make gains. If elected, Grossman said he'd expand the reach of the lottery, including selling popular scratch tickets at new locations like Logan Airport and local tourist centers.

Grossman said he hopes to push annual lottery profits to the $1 billion mark, which would require an increase of about $100 million. Lottery profits are funneled back into cities and towns.

Murphy said he also hopes to continue a strong lottery performance, in part by building on the success of popular games, including sports-themed scratch tickets.

Both Murphy and Grossman say they'd ask lawmakers to increase the lottery's advertising budget to as high as $8 million to $10 million from an existing $2 million, although they concede it's a tough sell when the state is laying off workers and slashing services.

"It's penny wise and pound foolish," Murphy said. "The $8 million in advertising could lead to another $30 to $40 million in sales."

The two say they support expanded gambling like casinos for the added jobs and revenues they could produce. While Grossman said he assumes casinos or slot machines at the state's racetracks could be a drag on lottery sales, Murphy says he isn't convinced.

Both candidates also had praise for Cahill's management of the Massachusetts School Building Authority, which helps provide an ongoing revenue source to local communities that want to build new schools. The authority relies on a portion of the state sales tax for its income.

Grossman has also vowed to make the treasurer's office more open by posting every expenditure of tax dollars online.

In 2002, the 64-year-old Newton businessman and head of the Grossman Marketing Group launched a bid for governor, but dropped out midway through the Democratic primary campaign. He said he will bring the discipline of a businessman to the treasurer's office.

"When you sit down with small business people and listen to what the roadblocks and barriers are in this economy and what you can do as treasurer, you learn an enormous amount of what is going on in the real world," he said.

Murphy is hoping for his own vindication after mounting a losing run to Cahill eight years ago. The 55-year-old lives in the Hyde Park neighborhood of Boston and said he understands both the intricacies of municipal budgets and the concerns of ordinary residents.

"I'm someone who understands public finance, but I also walk in the shoes of everyday people," he said.

Grossman is leading in the fundraising race with nearly $252,000 left in his campaign account as of the end of August. Murphy had $209,000. Polito had more than $56,000.

Polito said she welcomes the general election contest, and differs with her Democratic rivals on several points, including their plans to invest a portion of pension funds to boost job growth -- something she opposes.

"I'm not a social activist. I'm a fiscal conservative," she said. "I view the treasurer's function as being a watchdog for the people's money."